A surge in Covid cases driven by the delta variant slammed the brakes on the US jobs recovery in August, piling further pressure on Joe Biden.
The US dollar and stocks sank after just 235,000 jobs were added to the world’s largest economy in the weakest month of growth since January.
The reading from the Bureau of Labor Statistics was well below the 750,000 expected by Wall Street and suggested America’s jobs recovery is close to stalling again.Unemployment continued to fall, dropping from 5.4pc to 5.2pc, but the figures will concern the White House as another wave of Covid cases lets rip.
Mr Biden’s approval ratings have taken a dive to new lows since the Afghanistan crisis and infections started to soar again.
The president was elected on the promise of kick-starting a hiring spree but forecasters warned the worst is yet to come as the economic recovery fast loses momentum in the face of climbing Covid cases.The number of Americans admitted to hospital for Covid has reached 100,000 for the first time since January.
Ian Shepherdson, chief economist at Pantheon Macro, warned: “September likely will be weak too, and we’re becoming nervous about the prospects for a decent revival in October, given that behaviour lags cases, and cases are yet to peak.”
The rise in payrolls is a marked slowdown compared with the close to 1m jobs added in both June and July.Employment in the retail sector slipped and was flat in the leisure and hospitality sectors.However, wage growth picked up again to 4.3pc compared with a year earlier as employers fight to fill shortages.
Paul Ashworth, chief US economist at Capital Economics, said the disappointing figures indicate that the delta variant is beginning to weigh on the economy.
He warned the jobs slowdown “all but rules out any tapering announcement” from the US Federal Reserve as it mulls winding down its huge pandemic stimulus.“If this weakness persists, then it could be pushed into early next year,” he said.
The dollar edged lower after the figures suggested the Fed could need to delay its plans to dial back Covid stimulus.
Jerome Powell, US central bank chairman, has hinted that the winding down of the bank’s $120bn (£86.6bn) per month bond-buying programme could begin this year as rate-setters seek to contain inflationary pressures.
Markets Hub embed test 6:06PM Wrapping up T hat is all from us today – here are some of our top stories:
Andrew Neil set to quit GB News Brussels backs down over AstraZeneca vaccine row Founders of world’s biggest crypto Ponzi scheme charged with fraud Rolls-Royce faces American demands for £3.5bn power systems sale Apple delays iPhone tools to detect child abuse after privacy backlash Thank you for following along and have a great weekend!
6:05PM CMA investigates PCR test firm T he UK competition regulator has opened an investigation into one of the UK’s largest providers of Covid tests, following complaints that the company did not provide timely results and refused to issue refunds when due.
The Competition and Markets Authority (CMA) said customers also alleged Expert Medicals, which provides PCR tests, failed to respond to complaints.
The private firm has been removed from a list of testing providers who self-declare that they meet the government’s minimum standards of Covid testing, the regulator added.
The CMA has also written to 19 other test providers, warning them to improve their pricing information on concerns of falsely advertising tests at low prices.
5:48PM Kraft to pay $62m to settle accounting probe K raft Heinz will pay a $62m (£44.7m) penalty to settle charges of accounting wrongdoing that led it to report inflated earnings, which were later corrected.
The US’ Securities and Exchange Commission (SEC) also sued former chief procurement officer Klaus Hofmann for failing to maintain effective internal controls and former chief operating officer Eduardo Pelleissone for not addressing warning signs that expenses were being manipulated.
It said that from late 2015 through 2018, Kraft – the owner of Cadbury – engaged in various types of accounting misconduct, including misleading reports about nearly 300 contracts with suppliers.
Kraft restated its financial results in 2019, after the SEC started its probe, correcting $208m in improperly recognised cost savings.
Kraft didn’t admit or deny the SEC’s findings but agreed to avoid future violations and pay a civil penalty, the SEC said.
Mr Hofmann will pay a $100,000 fine and be barred from serving as an officer or director of a public company for five years and Mr Pelleissone will pay a civil penalty of $300,000.
5:12PM Banksy’s shredded painting back on offer, for a slim $8m B anksy’s painting of a young girl holding a red heart-shaped balloon is back on offer just three years after famously shredding itself as it was sold at auction – this time with a price tag of up to $8m (£5.7m).
The painting was sold for just over £1m in October 2018 by Sotheby’s in London, despite shredding itself after the bid.
It was renamed as ‘Love is in the Bin’ and is now being offered up for £4m to £6m in a sale by Sotheby’s on October 14.Prior to the auction, it will be displayed in London, Hong Kong, Taipei and New York.
Oliver Barker, Sotheby’s European chairman, told Reuters: “It’s gone up tremendously, nearly four times, obviously, since that last time.
But I think also in the interim, Banksy’s market commercially has also grown exponentially.
“It’s very rare to find an artwork by any artist, which is truly the icon not only of that artist, but actually in the art world itself.”
4:48PM Amazon to ramp up blocking harmful websites A mazon plans to take a more aggressive approach to blocking websites that break its online safety rules, reports my colleague Matthew Field.
It comes as tech companies grapple with the balance between free speech and online moderation.
Amazon – which has a 40pc market share of providing internet hosting services that keep thousands of websites online – will hire a growing team as part of its Amazon Web Services (AWS) unit to monitor for harmful websites that violate its terms and conditions.
The giant has long avoided being dragged into debates over free speech that have surrounded rivals such as Facebook and Google.
An AWS spokesperson said: “When AWS Trust & Safety is made aware of abusive or illegal behaviour on AWS services, they act quickly to investigate and engage with customers to take appropriate actions.As AWS continues to expand, we expect this team to continue to grow.”
4:25PM Private equity firm considers sale of Breitling stake C VC Capital Partners is considering the sale of a stake in Swiss luxury watchmaker Breitling after receiving interest from potential investors, reported Bloomberg.
It said the Luxembourg-headquartered private equity firm is speaking with advisers about the potential sale of a significant minority holding in Breitling and plans to keep control of the business in any deal, to benefit from future growth.
Deliberations are at an early stage, and there’s no certainty they will lead to a transaction.
C VC bought a majority stake in Breitling in a 2017 deal valued at more than €800m (£686m).Since then, it’s simplified Breitling’s product range, expanded sales in Asia and pushed to make the watches more appealing to female customers.
4:09PM Asda exodus intensifies T he exodus of senior staff at Asda intensified as two more top executives stepped down following the £6.8bn takeover by the Issa brothers, reports my colleague Laura Onita.
Anthony Hemmerdinger, chief operating officer, and Preyash Thakrar, interim chief customer officer and previously strategy chief, are leaving the supermarket chain.
Mr Hemmerdinger was regarded as the most likely internal successor to chief executive Roger Burnley, who quit early from the business last month.Mr Burnley had been at the helm since 2018 and in March signalled plans to leave next year.He originally said he would remain in his post until a successor was identified.
The grocer is yet to announce his successor as it continues to look for candidates internally and externally.
Insiders said that Mr Burnley’s departure was “accelerated” after the two brothers, who became billionaires by building one of the world’s biggest petrol station empires, took control of Asda.Their style is more “entrepreneurial” and the culture was “fast-moving”.
3:55PM US markets fluctuate following weak open U S markets are fluctuating, having slipped at open.It comes as traders assess a sharp slowdown in jobs growth last month, which gave the strongest signal yet that a post-pandemic economic rebound was losing steam, at a time when the Fed is considering a stimulus reduction.
Bloomberg also reported that US Democratic lawmakers are discussing a range of tax proposals targeting corporations and the wealthy, including levies on stock buybacks, carbon emissions and executive compensation.
Most groups in the benchmark S&P 500 retreated with the index down 0.2pc in mid-morning trading in New York.
It was mirrored by the Dow Jones while the Nasdaq 100 outperformed major benchmarks.
3:35PM Vistry to pair exec pay to green targets F TSE 250 housebuilder Vistry will start to link its executive’s pay packets to sustainability targets from next year.
Bosses at the company must hit carbon-reduction targets to trigger parts of their bonuses.The board will seek approval of its exact strategy by the Science Based Targets Initiative, which helps corporations set out environmental plans.
Vistry plans to hand over its first net-zero carbon homes this year, which will become standard practice by 2030.It has said carbon emissions linked to building homes will be zero by 2040, “including the emissions from the building’s products and construction operations”.
3:14PM BA mulls setting up Gatwick subsidiary B ritish Airways is considering setting up a new independent subsidiary for its short-haul operations at London’s Gatwick airport.The unit would be branded British Airways and offer the same standard of service.
The airline – owned by blue chip IAG – last month said it was evaluating its operations at the airport.Gatwick is London’s second biggest airport following BA’s main hub of Heathrow.
BA also said it was running a process of evaluating alternatives for the London Gatwick slots.
2:50PM Stocks and dollar drop, inflation weighs on traders’ minds B oth stocks and bonds have dropped as traders assessed the weak jobs data.
And the US dollar has now fallen 0.2pc against a basket of currencies that traders use to track its value.
The safe haven currency has slipped to 92.06, having been as high as 92.22.It has also lost 0.21pc against the Yen, a key comparison currency for investors.
The pound and euro have both inched up 0.05pc against the currency as traders flocked away from the dollar.
Stocks were expected to jump, with weak jobs growth making a taper less likely from the Fed, but US markets have all slipped in early trading.
The S&P 500 retreated 0.22pc from yesterday’s record high, with the Nasdaq dropping 0.11pc and the Dow down 0.35pc.
Traders may be spooked by signs of creeping inflation with average hourly earnings rising by 17 cents to $30.73 in August amid a shortage of workers.
“Hourly wages took off and it looks to me as if wage inflation is not that far way,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
2:21PM More reaction to US payrolls miss “This is a major miss and screams delta Disruption,” said Seema Shah, chief strategist at Principal Global Investors.“The Fed is currently much more focused on the employment recovery, implying that today’s very weak number will likely sway the Fed to a November taper, if not later.”
“Friday’s weaker-than-expected jobs puts less pressure on the Fed to taper its stimulus,” said Jay Pestrichelli, chief executive officer of Zega Financial.
“The stock market loves stimulus and any indication that the Fed will remain fully accommodative is good news for investors.”
“Ultimately, the market is going to try to interpret how the Fed will incorporate this report into their timeline, and I think this will probably push expectations toward the November meeting rather than September,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors.
2:19PM Fed taper ‘to be pushed back to Q4’ M ichael Hewson, chief market analyst at CMC Markets , said the Fed taper will be “delayed but not deferred” after the wide miss on jobs growth.
The prospect of reducing the current level of $120bn monthly asset purchases in September does seem more remote now, meaning Fed hawks will likely have to wait until their meeting due nearer November to make their case for cutting stimulus back.
Hewson says the August miss has more to do with a lack of activity during the school holidays, as well as the fact that Covid federal unemployment benefits don’t end until early next month, making September’s jobs growth a better indicator of the economic recovery.
“The big question is will we get a snapback in September?” he says.
Mike Owens, global sales trader at Saxo Markets, points to the 4.3pc hike in wages as a longer term risk, which he says pushes against the Fed’s belief that the current high level of inflation is temporary.
The readings should be market positive for equity prices in the short term, especially for high-growth and technology stocks, although we’re seeing little initial reaction from index futures.
US markets now look set to edge into the green at the open after record highs for the S&P 500 and Nasdaq yesterday.
1:54PM Covid spread puts brakes on US jobs growth T he dollar has fallen 0.11pc after that huge miss on US jobs creation, falling to 92.13 against a basket of rival currencies.
Meanwhile the S&P 500 looks set to open flat, up a marginal 0.02pc, while the Dow and Nasdaq futures point to respective drops of 0.11pc and 0.17pc at the opening bell.Still, the miss has fuelled bets the Federal Reserve will continue providing enough stimulus to revive the world’s largest economy.
The slowdown likely reflects the rapidly spreading delta variant of Covid-19 and difficulties filling vacant positions, analysts said.
The surge in infections, which has already curbed consumer activity and disrupted in-person schooling and return-to-office plans, may have led businesses to grow more cautious about hiring.
Richard Flynn, MD of investor Charles Schwab UK, said:
Investors will be worried that today’s downbeat jobs report is a sign of a faster-than-expected economic slowdown.US job numbers are yet to fully bounce back to pre-pandemic levels, and this gap is unlikely to close this year unless we see a string of million-plus job gains each month.
The disappointing figures will add to concerns around the spread of the Covid-19 delta variant, ongoing shipping backlogs and parts shortages, and the return of the federal government’s debt ceiling.
All of these could slow future growth.
1:42PM US payrolls miss hits dollar U S hiring sank to its lowest growth in seven months to miss expectations by a mile, easing expectations the Federal Reserve will taper monetary support sooner than expected.
Non-farm payrolls increased 235,000 last month after an upwardly revised 1.05m gain in July, a Labor Department report showed Friday.
The unemployment rate fell to 5.2pc.
Economists had estimated an increase of 745,000 jobs.
The US dollar, a safe haven for investors, dropped 0.194pc immediately after the announcement as stock futures held onto gains.The yield on the 10-year Treasury note also fell.
The deceleration in hiring likely reflects both growing fears about the rapidly spreading delta variant of Covid-19 and difficulties filling vacant positions.
The surge in infections, which has already curbed consumer activity and disrupted in-person schooling and return-to-office plans, may have led businesses to grow more cautious about hiring and dissuaded some workers from pursuing high-contact employment opportunities.
Fed officials have emphasized the importance of the monthly employment reports as a guiding metric for the timing of when to begin reducing its asset purchases.The disappointing report reinforces the central bank’s data-driven approach to the timing of tapering.
1:34PM US payrolls report huge miss U S payrolls have come in wildly under expectations of 725,000 additional jobs for August: in fact just 235,000 were created.
Payroll employment rises by 235,000 in August; unemployment rate declines to 5.2% https://t.co/1Y9cSWJUIB #JobsReport #BLSdata
— BLS-Labor Statistics (@BLS_gov) September 3, 2021
1:24PM Non-farm US payrolls moment of truth approaches A ll traders have their eyes on the non-farm payroll report, which is about 10 minutes away now.
A huge drop below the expected 750,000 new jobs would ease the pressure on the Fed to taper asset purchases, and would probably see investors pile into US markets, sending them soaring.
A big miss the other way would probably see traders quit stocks and push up the US dollar, considered a safe haven, instead, while ratcheting up the likelihood of a steeper and sooner Fed taper.
Goldman Sachs has issued its own prediction that suggests a big drop below expectations:
We estimate nonfarm payrolls rose 500k in August, below consensus of +725k.
While the seasonal hurdle is relatively low in August, the monthly pace and cross-section of Big Data employment indicators are consistent with a sizeable drag from the Delta variant.
But it really could land anywhere – see below for a range of estimates:
All eyes on Non-Farm-Payrolls #NFP
Sell-Side estimates below.
Should #NFP come in below consensus, will we see a melt-up to $SPY $QQQ ANTH’s? pic.twitter.com/m4FI8JOM33
— Trading Levels (@daily_levels) September 3, 2021
1:00PM Berkeley warns over rising construction costs A s we saw this morning, Berkeley issued a warning over rising construction costs, having relied upon even faster climbing sales prices to beat the inflation trap so far.Its shares were up earlier but have since lost its gains to drop into the red.
My colleague Ben Gartside has the full story below:
The high-end housebuilder has raised concerns that recent supply chain issues are set to continue, as material costs and supply chain issues continue.
In a statement, the company said that the sales market had been resilient, but operations had been challenging.
“As reported in the wider market, and in line with our year-end results update, we have continued to experience inflationary pressure in build costs during this period, principally through materials, and we are mindful of ongoing issues in the supply chain and labour market resulting from Brexit and the pandemic.”
The housebuilder’s focus on complex London brownfield development which other companies shy away from due to risk has led to profits due to booming house prices.
The company said it remained confident of achieving profits of over £518m, as the pace of reservations has continued despite tapering of the stamp duty holiday.
The housebuilder told investors on Friday that sales pricing has stayed above business plan levels, offsetting the jump in building material costs.
Berkeley said reservations are currently in line with those seen two years prior to the pandemic, after seeing a “gradual firming” in recent months in the capital.
Meanwhile, outside of London, the group said the market has “remained robust”.
Russ Mould at AJ Bell warned that the company may need to accept lower profit margins later in the year, if shortages continue.
Mr Mould said: “October is likely to be a testing time for the property market as the lack of the money-saving incentive could see housing activity calm down, thereby bringing down prices with it.”
“If housebuilders can’t cover the extra costs of building materials through higher prices, then they must stomach lower profit margins.”
In early trading, Berkeley shares were almost level with the previous close at 4763p.
12:54PM Andrew Neil delays GB News return Andrew Neil last presented a GB News show on June 24 Credit: Yui Mok/PA Wire G B News’ most recognisable broadcaster has delayed his return to the controversial channel after an absence that has stretched to more than two months.
The veteran presenter was supposed to return to the airwaves on Monday but this has been cancelled amid speculation mounts over a fallout with senior management, according to The Times.
My colleague Ben Woods reports:
Insiders told The Telegraph last month that Mr Neil may never return due to a stand-off with the GB News chief executive, Angelos Frangopoulos.The Australian has been weighing whether to remodel the channel along the lines of opinionated US channels such as Fox News.
A source added at the time that “relations between the chairman and chief executive have completely broken down”.
A spokeswoman for GB News previously said the channel was looking forward to Mr Neil returning from holiday in September to present his 8pm show.
Read the full story here.
12:43PM Astra and EU end vaccine dispute B russels has backed down in its row with AstraZeneca over the pharma giant’s vaccine supply as the pair struck a deal over future doses following months of bitter argument.
Astra began shipping doses from a British factory last month after EU diplomats criticised a lack of shipments.The pharma company had originally agreed to supply the EU with up to 300m doses in the first six months of 2021, but later revised this down to 100m doses due to production troubles across the continent.
My colleague Hannah Boland writes:
Under the settlement, AstraZeneca committed to deliver 60m doses of the vaccine by the end of September, a further 75m by the end of the year and 65m more jabs by the end of next March.
This would mean a total of 300m doses would be delivered as agreed under the contract, albeit nine months later than had originally planned.
Read the full story here.
12:25PM Ethereum closes in on $4,000 E thereum is rising again, and closing in on a record high of $4,000.
The cryptocurrency is up 4.8pc to $3,937.80 compared to Bitcoin’s 0.8pc drop today and a nalysts pointed to limits on the supply entering circulation and increasing transaction numbers pushing it higher.
Simon Peters, cryptoasset analyst at multi-asset investment platform eToro, says:
A number of factors are creating significant upward pressure on the price of the coin.
Firstly, the number of transactions happening on the Ethereum network is increasing again, but perhaps more significantly the gas being used on the network is near all-time highs.
Gas is the name for the cost of performing transactions of the Ethereum network.
A combination of high gas usage and the London hard fork – the EIP-1559 upgrade which happened at the beginning of August and introduced a ‘burning’ of ETH tokens – is resulting in less new ETH coming into circulation than before the hard fork.
Secondly, the quantity of ETH tokens being locked into DeFi [general circulation] is rising.This is placing added pressure on the supply of the cryptoasset as more tokens become essentially unavailable to the market for trading.
Finally, ETH staking is growing.Currently, around 7.2 million ETH are staked which equates to around 6pc of ETH tokens, again limiting supply.The process of staking is also becoming more widely accessible, with multi-asset investment platforms like eToro now offering ETH staking.
12:12PM China considers stake in Didi C hinese ride-hailing giant Did is up 4pc in pre-market trading (after a 4pc overnight fall) following a report that Beijing is considering taking the company under state control.
Bloomberg reported that Beijing has mooted making an investment in Didi through companies based in the city, though it is not clear how large a stake the city government would take.
Didi is under investigation over its cybersecurity practices from seven separate government departments, while Beijing ordered new user registrations to be suspended and removed its 25 apps from app stores in July.
11:56AM Eurozone retail sales suffer surprise fall .
